Liliane Bettencourt, heir to the French L’Oreal hairspray empire and the world’s wealthiest woman, who was at the centre of a long-running French courtroom saga over alleged hangers-on who took advantage of her frailty to elicit money and gifts, has died aged 94.

Bettencourt, whose net worth was estimated at about €33bn (£29bn) this year, was the face of one of France’s biggest cosmetics conglomerates and had once captured the public’s imagination as the nation’s poor little rich girl.

She was the daughter of Eugène Schueller, a chemist and one-time Nazi sympathiser who made a fortune as the inventor of modern hair dye and founder of L’Oréal. Her mother died when she was five, leaving her alone with Schueller whose company she inherited.

Bettencourt hit the headlines in 2007 when members of her entourage were charged with exploiting her failing mental health – leading to a vast inquiry that threatened to engulf the then-president Nicolas Sarkozy.

When Bettencourt’s husband, the politician André Bettencourt, died in 2007, their daughter Françoise Bettencourt Meyers, decided to take legal action against her mother’s eccentric best friend, François-Marie Banier. The dandy photographer, artist and one-time society golden boy was accused of taking advantage of Bettencourt’s frailty to accept almost €1bn worth of gifts, including paintings, life insurance policies and a salary from L’Oreal.

Shocked domestic staff at Bettencourt’s mansion west of Paris whispered how the flamboyant Banier would pee in the flowerbeds, lie on Bettencourt’s bed with his shoes on and make requests for money.

Banier denied the allegations, but it was just the start of a multi-layered legal inquiry that became the nation’s soap opera.

The saga resulted in not only a public family feud but a major political scandal and courtroom drama when the investigation was extended to look at whether Sarkozy and other figures in his party had also taken advantage of the elderly Bettencourt, asking for money from her after it was declared that she had dementia.

The money, alleged to have been given in brown envelopes, was said to have funded Sarkozy’s 2007 presidential campaign.

Liliane Bettencourt with François-Marie Banier in 2004, who was convicted of exploiting her in 2015. Photograph: Horst Assinger/EPA

The “Bettencourt affair” tarnished the latter half of Sarkozy’s presidency, and when he lost the 2012 election he was placed under formal investigation for illegal campaign financing and taking advantage of Bettencourt. But the charges against Sarkozy were dropped in October 2013 due to lack of evidence.

In 2015, the photographer Banier was convicted of exploiting Bettencourt and sentenced to three years in jail, fined €350,000 and ordered to pay €158m in damages. He appealed and last year received a suspended prison sentence and a fine but did not have to pay the vast damages.

In the meantime, other cases had opened around the affair, including a court case over the publication of secretly recorded conversations between Bettencourt and her wealth manager which were taped when her butler hid a recorder in her mansion.

Bettencourt had been declared unfit to run her own affairs in 2011 after a medical report showing she had suffered from “mixed dementia” and “moderately severe” Alzheimer’s disease since 2006. She was rarely seen in public after leaving the L’Oreal board in 2012.

“Liliane Bettencourt died last night at home,” her daughter Françoise Bettencourt Meyers said in a statement. “My mother left peacefully.”